Following a meeting of the
State Duma Council on 30 June, Duma Speaker Gennadii
Seleznev announced that deputies will hold an
extraordinary session on 15 and 16 July to consider the
draft laws in the government's anti-crisis program in the
second and third readings, ITAR-TASS reported. The laws
are set to be considered in the first reading before the
Duma finishes its spring session on 3 July. Finance Minister
Zadornov expressed confidence that "all the draft laws
have a chance of winning the Duma's approval" in mid-July,
Reuters reported on 30 June. The previous day, Duma
Budget Committee Chairman Aleksandr Zhukov of the
Russian Regions said government estimates that the anti-
crisis program will boost budget revenues by some 100
billion rubles ($16 billion) are "overly optimistic," Russian
news agencies reported. LB

DUMA COMMITTEE APPROVES MOST TAX PROPOSALS...

The Duma Budget Committee on 29 June recommended that
the lower house approve in the first reading most of the
tax laws proposed by the government, RFE/RL's Moscow
bureau reported. However, some laws may undergo
substantial amendments. For instance, some Budget
Committee members endorsed plans to charge a single
rate of value-added tax on all goods except for bread, milk
products, and children's food, but they also called for
lowering VAT from the current rate of 20 percent. (Finance
Minister Zadornov described as a "joke" proposals to
reduce VAT, which accounted for nearly half of all federal
revenues during the first four months of 1998, Interfax
reported.) The committee postponed consideration of the
proposed law on income tax, which some deputies
slammed. Communist Yurii Voronin said giving the federal
government 40 percent of income tax revenues would
break the budgets of tens of thousands of cities. LB

...BUT OPPOSES LAW TAXING SERVICES NOT PAID FOR

Of the 12 government-backed tax laws considered by the
Duma Budget Committee on 29 June, the committee
recommended that the lower house reject in the first
reading only one, "Kommersant-Daily" reported on 30 June.
That proposal would force companies to pay taxes and
excise duties on services and goods at the time they are
shipped to the consumer, rather than when payment is
received. Such a law would deal a major blow to companies
with numerous non-paying customers, such as the gas
monopoly Gazprom and the electricity giant Unified Energy
System. LB

CHERNOMYRDIN CALLS FOR MORE EXPERIENCE IN
GOVERNMENT

Former Prime Minister Viktor
Chernomyrdin on 29 June called for reinforcing the
government with "people who have experience and
knowledge," Russian news agencies reported. He argued
that "it is obvious that the laws submitted by the
government to the State Duma were prepared in haste,"
adding that "there is an obvious lack of people who could
understand what is going on." (Prime Minister Sergei
Kirienko is 35 years old, and Oleg Sysuev, age 45, is the
oldest of the three deputy prime ministers.) However,
Chernomyrdin denied that he is seeking to return to the
cabinet. He called for amendments to some of the
government proposals, which, in his view, would harm the
interests of the regions. By way of example, he named
proposals to phase out agriculture subsidies, introduce a
sales tax, and shift more responsibility for financing
science and education to regional authorities. LB

COMMISSION ON IMPEACHMENT HOLDS FIRST MEETING

The Duma commission that will decide whether a motion to
impeach President Boris Yeltsin is warranted convened for
the first time on 29 June, Russian news agencies reported.
Chairman Vadim Filimonov, a member of the Communist
faction, announced that the commission will work through
the Duma's summer recess. Filimonov declined to set a
deadline for the completion of the commission's work.
Duma First Deputy Speaker Vladimir Ryzhkov has charged
that main goal of the commission is to protect the Duma
against dissolution, "Pravda" reported on 30 June. The
president cannot disband the lower house of the parliament
if the Duma has adopted a motion on impeachment.
Filimonov's commission could quickly draft such a motion
and put it on the Duma's agenda if the threat of dissolution
appeared imminent, "Kommersant-Daily" noted on 30 June.
LB

YELTSIN SACKS REPRESENTATIVE AT
CONSTITUTIONAL COURT

Yeltsin on 29 June sacked
Sergei Shakhrai as his representative at the Constitutional
Court, Russian news agencies reported. The presidential
decree gave no reason for the dismissal, but Shakhrai
claimed he was fired for remarks he made at a 27 June
congress of his Party of Russian Unity and Accord (PRES).
Addressing that congress, Shakhrai predicted that the
Duma will support a motion to impeach Yeltsin by the
necessary two-thirds majority. He also called for
supporting Moscow Mayor Yurii Luzhkov in the next
presidential election. But "Kommersant-Daily" and "Russkii
telegraf" both suggested on 30 June that Shakhrai's
dismissal has been in the works for several weeks. Yeltsin
appointed Kremlin official Mikhail Mityukov to replace
Shakhrai as his representative at the Constitutional Court,
which will consider several cases important to the
president later this year. LB

SHAKHRAI PUTS STAKE ON LUZHKOV

Shakhrai told
"Kommersant-Daily" on 30 June that his Party of Russian
Unity and Accord (PRES) will most likely compete in the
next parliamentary elections as part of a coalition
supporting Moscow Mayor Luzhkov. He predicted that such
a coalition could gain one-third of the vote. Shakhrai
believes that the next Duma elections will determine two
leading candidates for the presidency: Luzhkov and
Krasnoyarsk Krai Governor Aleksandr Lebed. In December
1993, when Shakhrai was in Yeltsin's inner circle and was a
deputy prime minister, PRES gained 6.7 percent of the vote
in Duma elections. In 1995, Shakhrai was an important
figure behind the creation of Chernomyrdin's Our Home Is
Russia movement. However, he parted ways with
Chernomyrdin, and PRES competed alone in the December
1995 parliamentary election, gaining just 0.36 percent of
the vote. LB

THREE CUSTOMS OFFICIALS TO BE FIRED OVER
CONFLICT WITH MEDIA...

State Customs Committee head
Valerii Draganov announced on 29 June that he has sent
Prime Minister Kirienko a request to dismiss three deputy
heads of the committee: Valerii Shpagin, Valerii
Maksimtsev, and Nikolai Lyutov, Russian media reported.
Draganov noted he did not make such a recommendation
easily. His decision is a response to a recent open letter to
Yeltsin signed by more than 15 editors of Russian
publications who slammed the activities of customs
officials. In February, the committee issued an order to
charge value-added tax on print media published abroad.
Journalists argued that the order violated the 1995 law on
state support for the mass media, and the Supreme Court
agreed on 15 June. Nevertheless, the following week
customs officials held up issues of several Russian
magazines, demanding proof that they are cultural,
scientific, or educational in nature. LB

...BUT JOURNALISTS NOT CELEBRATING VICTORY YET

Sergei Parkhomenko, the editor of the weekly magazine
"Itogi," told RFE/RL's Moscow bureau on 29 June that
journalists welcome Draganov's remarks but are waiting for
more concrete actions to ensure that the State Customs
Committee will not interfere with shipments of print media
to Russia. "Itogi," one of many Russian magazines published
in Finland, was among the publications held up last week by
customs officials. The law on state support for the mass
media exempts all print media from paying value-added
tax except for publications devoted to advertising or
erotica. But according to Parkhomenko, customs officials
now demand that magazines obtain documents with every
edition to prove that they are neither advertising nor
erotic publications. According to "Kommersant-Daily" on
30 June, customs officials on 29 June again held up editions
of several Russian magazines at the border. LB

DEFENSE MINISTRY HIRES BACK FORMER BIGWIGS

The
Defense Ministry has hired back many former prominent
officers, "Nezavisimoe voennoe obozrenie" reported in its
26 June-2 July edition. Several months ago, former
Defense Minister Pavel Grachev was hired as an adviser to
the state-owned arms exporter Rosvooruzhenie. Earlier
this month, officials announced the imminent appointment
of former Soviet Defense Minister Dmitrii Yazov, one of the
key figures in the August 1991 coup, as an adviser to
Leonid Ivashov, head of the Defense Ministry's Main
Directorate for International Military Cooperation. Former
Ground Forces commander Vladimir Semenov and former
General Staff chief Mikhail Kolesnikov have also joined the
ranks of Defense Ministry advisers. "Nezavisimoe voennoe
obozrenie" argued that the appointments reflect a
strategy to "neutralize" potential leaders of political
opposition in military ranks. LB

GOVERNMENT TRIES TO ASSUAGE FEARS OF
EDUCATION REFORM

Prime Minister Kirienko told a 26
June meeting of higher-education directors that the
government will not economize on education,
"Kommersant-Daily" reported on 27 June. In a 19 June
interview with "Izvestiya," Education Minister Aleksandr
Tikhonov said that "the transformation of Russia into a
country of paid education is a political and social myth."
Their remarks aim to mollify widespread opposition among
Duma deputies and educators to planned higher-education
reforms, including the mergers of some institutions, the
reduction of the number of teachers by one-fifth, the
replacement of government stipends with means-tested
"social assistance" to needy students, and government
licensing of commercially operated schools (see "RFE/RL
Newsline," 19 March and 21 May 1998). Viktor Sadovnichii,
the principal of Moscow State University, charged that
government under-funding of higher education threatens
Russians' constitutional right to acquire an education,
"Nezavisimaya gazeta" reported on 27 June. BT

FOURTH SUSPECT ARRESTED IN KALMYKIAN
JOURNALIST'S MURDER

Police in Elista have arrested a
fourth suspect in connection with the 7 June murder of
Larisa Yudina, the editor of "Sovetskaya Kalmykia
Segodnya," "Kommersant-Daily" reported on 30 June.
Sergei Lipin was incriminated during an interrogation of
one of the other three suspects in the case. He is accused
of moving Yudina's body after the murder to the pond
where it was discovered. According to "Kommersant-
Daily," Lipin has already confessed to his part in the crime
but insists that he does not know who gave the order to kill
Yudina. Like the other suspects, he is being held in pre-
trial detention in Stavropol Krai. LB

JOURNALIST BEATEN IN KIROV

Sergei Bachinin, the
editor-in-chief of the newspaper "Vyatskii nablyudatel" in
Kirov (Kirov Oblast), was hospitalized on 29 June with a
severe concussion and other skull injuries, ITAR-TASS
reported on 30 June. Colleagues at the newspaper, which is
critical of the local authorities, became suspicious when
Bachinin did not turn up for a work-related party on 27
June and did not come to the office two days later. They
went to his apartment on 29 June and found him lying on his
bed in a pool of blood. Colleagues believe the crime is
linked to the editorial policy of "Vyatskii nablyudatel" and
Bachinin's long-standing conflicts with the city authorities.
According to ITAR-TASS, Bachinin ran for mayor of Kirov in
1996 and was the main rival of the candidate who won that
election. LB

CHECHEN PRESIDENT, FOREIGN MINISTER AT ODDS
OVER OSCE

Chechen Foreign Minister Movladi Udugov told
journalists in Grozny on 29 June that his ministry has given
the OSCE mission in the Chechen capital 15 days to apply to
the government for an official mandate to continue its
activities in Chechnya, Russian agencies reported. He said
the mission will be asked to leave Chechnya if it fails to do
so. Udugov argued that allowing the OSCE to remain in
Chechnya under an agreement signed by the Russian
government is tantamount to acknowledging Chechnya's
subordination to Russia. And he added that the ultimatum
had the approval of President Aslan Maskhadov. But
Maskhadov's press spokesman, Mairbek Vachagaev, told
Interfax that the president has no intention of expelling
the OSCE mission from Chechnya, although he thinks it
"correct" that the mission should coordinate its continued
presence with the Chechen government. LF

CHECHNYA WANTS UN MEMBERSHIP

Also on 29 June,
Udugov said that Chechnya will apply for UN membership,
Interfax reported. He added that talks on diplomatic
recognition currently being conducted with more than 10
countries would have brought "positive results" long ago
but for the interference of the Russian Foreign Ministry. LF

TATARSTAN ABOLISHES LANGUAGE BONUS

The 15
percent wage increase granted to employees in the
republic's culture and education sectors who are fluent in
both Tatar and Russian is illegal and has been rescinded,
according to a ruling by Tatar prosecutor-general cited in
"Nezavisimaya gazeta" of 30 June. The increases had
provoked a storm of criticism when they were introduced
last year. LF

Aliyev ALLY TO CONTEND AZERBAIJANI PRESIDENTIAL
POLL

Nizami Suleymanov, chairman of the pro-
government Independent Azerbaijan Party, told a news
conference in Baku on 29 June that he will run in the
presidential elections scheduled for October, Turan
reported. He explained his decision by saying that "only
Allah is indispensable," and that alternatives exist to the
incumbent, Heidar Aliev. At the same time, he added that
he has no doubts that Aliyev will be re-elected. He said that
the opposition parties' plan to boycott the poll was an
acknowledgment of defeat. Suleymanov ran as a
presidential candidate in June 1992, against Azerbaijan
Popular Front chairman Abulfaz Elchibey. He won 38 percent
of the vote on the strength of a pledge to end the war in
Nagorno-Karabakh within three months. LF

EX-PRESIDENT SUMMONED BY AZERBAIJANI INTERIOR
MINISTRY

Azerbaijan Popular Front Party chairman
Abulfaz Elchibey was summoned to the Interior Ministry's
Department to Combat Organized Crime on 29 June, Turan
reported. Elchibey linked the summons to the criminal case
recently opened against a member of the Azerbaijan
Popular Front Party in connection with a draft document
confiscated during a search of the editorial offices of the
opposition newspaper "Chag." The authorities have termed
the document subversive. LF

ARMENIA TO EXEMPT SMALL BUSINESSES FROM
INCOME TAX

In a bid to boost budget revenues and
preclude tax evasion, the Armenian government has
drafted legislation extending the so-called system of
"fixed payments" to more categories of small businesses,
thereby exempting them from income tax, RFE/RL's
Yerevan bureau reported. Under that law kiosks, open-air
markets, and some services sector outlets will pay a fixed
amount of money to the state, depending on their location
and size. Finance and Economy Minister Eduard Sandoyan
told the parliament on 29 June that the measure will not
only increase budget revenues but will also expand the tax
base by cracking down on tax evasion among owners of
small businesses. Sandoyan also sought approval for a 25
percent increase in fixed payments for those businesses
already operating under the system to bring their
contributions into line with inflation. LF

NAGORNO-KARABAKH TO HOLD LOCAL ELECTIONS

The
government of the unrecognized Nagorno-Karabakh
Republic has reaffirmed its intention to hold elections to
local self-government bodies, RFE/RL's Stepanakert
correspondent reported on 29 June. Those elections will
take place on 27 September. A government directive
specifically instructs local authorities to cooperate with
the Nagorno-Karabakh Central Election Commission in
ensuring a free and fair vote. Previous presidential and
parliamentary elections in Nagorno-Karabakh were not
deemed legitimate by the international community
because the disputed region's ethnic Azerbaijani minority,
who fled during the early years of the conflict, was unable
to participate. LF

ARTICLE CLAIMS KARABAKH IS READY FOR UN
MEMBERSHIP

An article published in "Nezavisimaya
gazeta" on 30 June lists the reasons why the author
considers Nagorno-Karabakh qualifies for UN membership.
The article points out that the December 1991 referendum
on independence from Azerbaijan took place in accordance
with existing Soviet legislation. It also says that, as a non-
UN member, Karabakh is deprived of the opportunity to
defend itself by diplomatic, as opposed to military, means.
An article published by the same author in "Nezavisimaya
gazeta" in January similarly called for the "decolonization"
of Karabakh and for the creation of a permanent security
corridor linking the enclave with Armenia. That article
argued that only international recognition could provide
adequate security for the Karabakh population. LF

NATO CALLS KAZAKHSTAN 'RELIABLE PARTICIPANT'

Klaus Naumann, chairman of NATO's Military Committee,
began a two-day visit to the Kazakh capital Astana on 29
June, RFE/RL correspondents and Interfax reported.
Naumann met with Kazakh Defense Minister Mukhtar
Altynbayev. Meeting with parliamentary deputies, Naumann
said that NATO is interested in stability in Central Asia and
that Kazakhstan is a "reliable participant" in the alliance's
Partnership for Peace program. Naumann held discussions
with Altynbayev on the military exercises scheduled for
September in Kazakhstan, Kyrgyzstan, and Uzbekistan as
part of the NATO program. BP

JAPAN TO HELP UPGRADE AIRPORT IN KAZAKH
CAPITAL

Kazakh Foreign Minister Kasymjomart Tokayev
on 29 June announced that Japan will lend Kazakhstan more
than 22 billion yen (some $150 million) to improve the
airport in the Kazakh capital, Interfax and ITAR-TASS
reported. The Astana airport was built more than 30 years
ago. According to ITAR-TASS, it "does not correspond to
international standards of civilian aviation." BP

ISRAELI DELEGATION ARRIVES IN KAZAKHSTAN

An
Israeli delegation led by Minister of Industry and Trade
Natan Sharanskii arrived in Almaty on 29 June, RFE/RL
correspondents and Interfax reported. Sharanskii, who is
also the co-chairman of the Israeli-Kazakh Economic
Commission, said he hopes trade between the two
countries can be increased, Interfax reported that in
recent years, Israel has exported farm produce worth $1
billion to Kazakhstan. Sharanskii said trade will improve
once Kazakh producers have more information about
"borrowing, business plans, or mortgage mechanisms." The
Israeli delegation is scheduled to leave for Uzbekistan on
30 June. BP

GLASNOST FOUNDATION APPEALS TO UZBEK
PRESIDENT OVER JAILED JOURNALIST

The Glasnost
Defense Foundation has appealed to Islam Karimov to ask
for a revision of the verdict against journalist Shadi
Mardiev. A copy of the letter, obtained by RFE/RL's Uzbek
Service, claims two of the five charges on which Mardiev
was convicted are based on the former criminal code.
Mardiev was accused of extortion and slander by the
Samarkand regional deputy prosecutor following a
broadcast the journalist made last November. A Syr-Darya
district court sentenced him to 11 years earlier this
month. The Glasnost Defense Foundation claims Mardiev
was convicted because of his political criticism. It wants
Karimov to ensure a full and unbiased investigation into his
case. BP

RUSSIAN AMBASSADOR LEAVES RESIDENCE, NOT
MINSK

After the Belarusian authorities cut off water and
electricity to the Drazdy complex on 29 June, the Russian
ambassador left his residence there, the Russian Foreign
Ministry told Interfax. But whereas 11 other ambassadors
were recalled as a result of the standoff between the
diplomatic corps and the Belarusian government,
ambassador Valerii Loshchinin has simply moved into an
apartment elsewhere in the city. PG

KUCHMA SAYS COMMUNIST CAN BE PARLIAMENT
SPEAKER

At a meeting with leaders of the parliamentary
parties on 29 June, Ukrainian President Leonid Kuchma said
that Pyotr Simonenko, head of the Communist Party caucus,
would be acceptable if the parliament voted for him and if
the right-of-center caucuses were allowed to control at
least 10 of the 20 parliamentary committees, according to
ITAR-TASS. The other candidate in the next round of voting
on 30 June is Leonid Chernovetskiy, a member of Kuchma's
own People's Democratic Party. The parliament has been
seeking to elect a speaker since 12 May. Kuchma warned
that the deadlock is having a negative impact on Ukraine's
development. PG

ARGENTINA TO HELP UKRAINE ENCASE CHORNOBYL

During an official visit to Kyiv on 29 June, Argentinean
President Carlos Saul Menem said his country will provide
financial assistance to help build a more environmentally
safe container for the Chornobyl nuclear power station,
ITAR-TASS reported. Meanwhile, Ukrainian officials have
shut down reactor no. 2 for repairs at the country's
Yuzhnaya atomic energy station. Seven of Ukraine's 14
nuclear power reactors are now undergoing repairs. PG

ESTONIAN RURAL BANK DEPOSITORS TO RECEIVE
MONEY FROM FUND

The parliament has approved a
government plan whereby money from the stabilization
fund will be used to compensate depositors with the
recently liquidated Rural Bank, ETA reported on 29 June.
Some 266 million kroons ($17.7 million) will be taken from
the fund as a seven-year, interest-free loan. Deposits of
private individuals with the bank total 271 million kroons
and corporate deposits 167 million. The government, which
is the largest depositor with some 500 million kroons, will
be the last to receive compensation. The parliament, for
its part, has allocated 100 million kroons from the
supplementary budget to partially compensate depositors.
The Rural Bank was closed this spring after it lost some
200 million kroons on the stock market last year. JC

POLISH PRESIDENT IN MOSCOW

On a private visit to the
Russian capital on 29 June, Aleksander Kwasniewski met
with Russian President Boris Yeltsin, Russian and Polish
agencies reported. The two leaders discussed NATO
expansion, over which the two adhered to their respective
positions; Kosova, with Kwasniewski describing Russia's
position as "rational"; and Belarus, where the two agreed
not to try to isolate Minsk. Yeltsin accepted an invitation
to visit Warsaw in mid-December, his first trip there since
August 1993. And the two presidents agreed to meet
before 2000 to open a memorial monument at Katyn to the
Polish officers killed by Stalin during World War II. PG

POLAND TO PUSH FOR ACCELERATED EU ENTRY TALKS

Jan Kulakowski, Warsaw's chief negotiator with the EU, and
Ryszard Czarnecki, minister for European integration, said
on 29 June that Poland will seek to begin concrete talks
later this year on joining the EU, PAP reported. The
announcement came in response to the EU's decision to
delay such talks until sometime in 1999. Kulakowski said
the move would be coordinated with the other candidate
countries at a meeting in Ljubljana in mid-July. PG

POLISH TROOPS TO PATROL WARSAW STREETS

Responding to popular demands for a crackdown on crime,
the Polish Interior Ministry announced on 29 June that
soldiers will be patrolling Warsaw streets this summer,
Reuters reported. This is the first time troops will be on
duty there since the introduction of martial law in 1981.
The ministry denied that the recent murder of former
national police chief Marek Papala has anything to do with
the decision (see "RFE/RL Newsline," 26 June 1998). PG

NO PROGRESS IN CZECH COALITION TALKS

President
Vaclav Havel on 29 June met with Freedom Union chairman
Jan Ruml and leader of the Christian Democratic Party
(KDU-CSL) Josef Lux. Both party leaders said after the
meeting that no progress has been made in discussions on
a new coalition government. Lux stressed that the KDU-CSL
is not ready to agree to a minority government composed
of the Social Democratic Party and his own formation that
would be tolerated in the parliament by the Communists.
He also said the Freedom Union's recent announcement that
it is ready to form a coalition with Vaclav Klaus's Civic
Democratic Party (ODS) and the KDU-CSL under certain
conditions was "premature," CTK reported. ODS deputy
chairman Miroslav Macek told CTK that he is "disappointed"
that the Freedom Union is talking about "preliminary
conditions" even before starting coalition talks with the
ODS. MS

SLOVAK PRESIDENTIAL ELECTIONS LIKELY TO STALL
AGAIN

Forty-five deputies from Prime Minister Vladimir
Meciar's Movement for a Democratic Slovakia (HZDS) have
nominated Banska Bystrica university rector Otto Tomecek
as their candidate in the latest round of presidential
elections, scheduled for 9 July, Reuters reported on 29
June. As in the previous rounds, the opposition parties said
they will block the HZDS candidate. Without their support
Tomecek cannot obtain the minimum 90 votes needed for
election. Attorney Peter Tomka, who was backed by the
Party of Democratic Left, withdrew from the race over the
weekend, saying he has no chance of winning and that there
is no point in running. MS

SLOVAKIA, RUSSIA TO SWAP ARMS QUOTAS

Slovakia
and Russia on 29 June agreed to exchange their arms
quotas established by the Treaty on Conventional Forces in
Europe, ITAR-TASS reported. Under the agreement,
Slovakia will acquire another 15 fighter helicopters and
Russia another 15 combat aircraft. Defense Ministry
spokesman Jaroslav Tomas told journalists that the
exchange will take place within the next three months. He
added that NATO countries frequently redistribute quotas
among themselves. MS

HUNGARIAN PEOPLE'S PARTY ELECTS NEW LEADER

The
28 June national congress of the Hungarian Democratic
People's Party (MDNP) elected Erzsebet Pusztai as the
party's new leader. Former party chairman Ivan Szabo, who
resigned after the party's failure to enter the parliament in
the May elections, became MDNP honorary president for
life. Pusztai said it is essential that the MDNP conclude an
alliance with other civic forces before the local elections
scheduled for this fall. MSZ

SERBS LAUNCH OFFENSIVE TO RETAKE MINE

Serbian
security forces launched an offensive on 29 June to retake
the strategic mining town of Belacevac, near the Kosova
capital of Prishtina. Fighting initially centered around the
town's coal mine, which supplies two nearby power plants
and has been controlled by Kosova Liberation Army (UCK)
forces since last week. Detonations and gunfire continued
on 30 June. The area around the town was sealed off, and
Serbian police and Yugoslav army troops, backed up by
armored personnel carriers, moved into the area. Several
buildings in the town were reported to be ablaze. Hundreds
of civilians from Belacevac and the nearby towns of Hade
and Lismir have fled the area. There are no independent
reports of casualties. The situation in the central Kosovar
town of Kijeva is unchanged (see "RFE/RL Newsline," 29
June 1998). PB

EU WAITING FOR COMPLIANCE FROM BELGRADE

EU
foreign ministers have called on Yugoslav President
Slobodan Milosevic to immediately implement the pledges
he made in Moscow (see "RFE/RL Newsline," 16 June 1998),
including an halt to offensives against civilians, Reuters
reported on 30 June. The statement, issued after a meeting
in Luxembourg, stressed support for Kosova to be given "a
large degree of autonomy" by Belgrade. The foreign
ministers also adopted a ban on flights by the Yugoslav
state airline, JAT, to EU countries. However, a date for the
ban was not agreed upon. The foreign ministers were
divided over whether to allow UCK members to take part in
peace negotiations. British Foreign Secretary Robin Cook
said negotiations should be held with ethnic Albanian
leader Ibrahim Rugova, the "legitimate elected leader." PB

ANNAN URGES ACTION WITH UN MANDATE

UN
Secretary-General Kofi Annan on 29 June urged the
international community to move swiftly in Kosova in order
to avoid a "second Bosnia." Annan, speaking in Vienna, said
the UN Security Council would have to approve any military
action in the Serbian province. He also said he is willing to
travel to Yugoslavia if the situation calls for it. In Moscow,
the Russian Foreign Ministry said that it cannot support
NATO military action in Kosova and that Moscow expects
efforts to find a political solution to "bear fruit." PB

UCK SPOKESMAN SAYS RUGOVA OUT OF TOUCH WITH
PEOPLE

Jakup Krasniqi, a spokesman for the UCK, said on
28 June that Kosova shadow state President Ibrahim
Rugova does not have enough "political capital" to assume
control over the UCK, Belgrade-based Radio B92 reported.
Krasnici said that Rugova has lost touch with Kosovar
Albanians and that the UCK will never be controlled by a
man who has made so many accusations against it. Rugova
recently told Western officials that he will seek to gain
some influence over the UCK (see also "RFE/RL Newsline,"
22 June 1998). Krasniqi said the UCK has some 30,000
troops organized into three brigades. PB

RUGOVA ADVERSARY SAYS UCK CONTROLS HALF OF
KOSOVA

Adem Demaci, leader of the Parliamentary Party
of Kosova and a rival of Rugova, said on 27 June that UCK
forces control 50 percent of Kosova, the independent news
agency Beta reported. Previous reports have estimated
that the UCK has control over 30-40 percent of the
province. Demaci, in an interview published in the Croatian
newspaper "Jutarnji List," said the UCK troops control all of
the main roads in Kosova. He added that UCK forces are not
attempting to take over towns. Demaci said Rugova's
policy of non-violence has failed. Rugova and his
supporters "follow fiction" but the UCK "is a factor that has
helped us return to reality," he commented. PB

MACEDONIAN PREMIER GLOOMY ABOUT KOSOVA

Branko Crvenkovski said in Washington that there is "not
much room for optimism" over the crisis in Kosova, an
RFE/RL correspondent reported. Speaking after a meeting
with U.S. Deputy Secretary of State Strobe Talbott,
Crvenkovski said that there is still hope for finding "a
political solution" and that Belgrade must give ethnic
Albanians "substantive autonomy." Ethnic Albanians make
up some 25 percent of Macedonia's population. Crvenkovski
is to meet with U.S. Vice President Al Gore, Defense
Secretary William Cohen, as well as World Bank and IMF
officials during his visit. PB

MONTENEGRO ASKS PRIVATE BROADCASTERS NOT TO
SIGN CONTRACTS WITH BELGRADE

The Montenegrin
government on 27 June asked all private radio and
television stations not to sign any contracts with the
federal Yugoslav authorities. The government's Information
Office issued a statement saying that "Montenegrin radio
and television stations have no obligation toward the
federal government." It added that Belgrade's recent
demand that they sign contracts to rebroadcast a federal
program was "yet another unconstitutional attempt to
centralize the information environment in the federal
Yugoslavia," RFE/RL's South Slavic Service reported. FS

MONTENEGRO DEFIES BELGRADE OVER PREVLAKA

Montenegrin Foreign Minister Branko Perovic told the daily
"Pobjeda" on 26 June that his government is ready to open
a border checkpoint with Croatia on Prevlaka Island even
without a final settlement over the island's border. He
added that Belgrade rejected an offer to open the
checkpoint but had not consulted Podgorica over the issue.
Meanwhile, the UN General Assembly has appointed Graham
Roger Williams from New Zealand as commander of the 28-
member monitoring mission on Prevlaka, RFE/RL's South
Slavic Service reported. FS

BOSNIAN SERB PARTY ELECTS NEW LEADER

The
Serbian Democratic Party's General Assembly on 28 June
elected Dragan Kalinica as chairman. Kalinica replaces
Aleksa Buha, who resigned the previous day. Buha, a close
associate of indicted war criminal and Bosnian Serb leader
Radovan Karadzic, said he resigned because the party has
"not supported his model of party leadership." Tanjug
quoted party members as saying that Buha is unsatisfied
that his party nominated Momcilo Krajisnik, rather than
him, as a candidate for the presidency of Bosnia-
Herzegovina, RFE/RL's South Slavic Service reported. FS

EUROPEAN OFFICIALS PUSH FOR ALBANIAN
CONSTITUTION COMPROMISE

Representatives of the
Council of Europe's Parliamentary Assembly, the European
Parliament, and the OSCE's Parliamentary Assembly were in
Tirana on 29 June to push for closer cooperation between
the government and the opposition in drafting a new
constitution. After meeting with those officials,
Democratic Party Deputy Chairman Genc Pollo admitted
that his party has not kept an earlier promise to become
actively involved in the drafting process. His party has
demanded a veto in the parliamentary drafting
commission, but commission chairman Sabri Godo of the
Republican Party has rejected that proposal, "Koha Jone"
reported. FS

ALBANIAN PRESIDENT DEMANDS PARLIAMENT ACTION
OVER CONTRABAND

Rexhep Meidani on 29 June
presented to the parliament the results of an investigation
into customs evasion and smuggling, which show a
considerable drop in revenues from customs duties in the
first four months of 1998 compared with the last four
months of 1997 (see "RFE/RL Newsline," 25 June 1998).
Parliamentary speaker Skender Gjinushi demanded that the
parliamentary commissions for finance and the interior
launch investigations into the matter and make
recommendations to restructure the customs, police, and
judicial systems, "Koha Jone" reported. FS

ROMANIAN PREMIER SKEPTICAL ABOUT SPEEDY NATO
MEMBERSHIP

Prime Minister Radu Vasile, addressing a
forum of his party's youth organization in Calimanesti on 27
June, said it is "unlikely" that Romania will be invited to
join NATO next year and "more realistic" to view
membership as "possible" between 2000 and 2003. He said
that NATO membership remains a "major target" of
Romanian policy but that "the hysteria" that accompanied
Romania's bid for membership in 1997 must be avoided.
Vasile added that he does not believe his National Peasant
Party Christian Democratic (PNTCD) is able to win the next
elections on its own and that statements by PNTCD
members in favor of early elections are "inopportune." He
argued that the PNTCD must accept the idea that in the
year 2000 it will also need a coalition in order to rule,
RFE/RL's Bucharest bureau reported. MS

FORMER SECURITATE AGENTS SOUGHT IN TOP
LEADERSHIP

The Supreme National Defense Council on 29
June announced it has asked the Romanian Intelligence
Service (SRI), the Foreign Intelligence Service (SIE), the
Interior Ministry, and the Defense Ministry to report within
10 days whether any member of the council had links with
the communist secret police. The same day, the Chamber of
Deputies unanimously passed a resolution demanding that
the SRI do the same for its members within two weeks.
Also on 29 June, Democratic Party deputy Adrian Vilau,
whose former links with the Securitate were recently
revealed, resigned as chairman of the chamber's
commission overseeing the activity of SIE. MS

ROMANIA TO REDUCE MILITARY FORCES

Defense
Minister Victor Babiuc told journalists on 29 June that
Romania's military forces will be cut this year by some
10,000 troops. At the end of the process, he said, the total
number of troops will be reduced to150,000. In other news,
on 29 June the parliamentary group of the Hungarian
Democratic Federation of Romania in the Chamber of
Deputies submitted a draft law for setting up a Hungarian-
language university in Cluj. MS

YELTSIN RECONFIRMS RUSSIAN POSITION ON
TRANSDNIESTER

In a message to his Moldovan
counterpart, Petru Lucinschi, Russian President Boris
Yeltsin has reconfirmed that Moscow wants the sides
involved in the Transdniester conflict to "strictly abide by
the May 1997 memorandum on normalizing relations
between Moldova and the Transdniester and the March 1998
Odessa summit accords," Infotag reported on 29 June.
Yeltsin's message was delivered to Lucinschi by Igor
Morozov, the Russian representative at the Chisinau-
Tiraspol negotiations. MS

WESTERN EUROPEAN UNION OFFICIALS IN BULGARIA

Parliamentary chairman Yordan Sokolov on 29 June told a
WEU delegation that Bulgaria will comply with any decision
taken by the international community on the Kosova
conflict, an RFE/RL correspondent in Sofia reported. The
delegation is also scheduled to meet with Foreign and
Defense Ministry officials and tour military installations in
Plodviv and Karlovo. The WEU is the military arm of the EU.
MS

CHUBAIS TRIES TO JOLT ELECTRICITY SECTOR

by Stephanie Baker

With its glass walls and high-tech security, the new
headquarters of Komienergo, the regional electricity
company in Russia's Far North, seem extravagant for a
company saddled with debts and struggling to make ends
meet. But the company's management said looks are
deceiving. Ivan Medvedev, Komienergo's financial director,
says: "We built this place through barter."

Since the company was collecting only 10 percent of
its bills in cash, building a new headquarters through
bartered goods made sense. The local timber mill could not
pay its electricity bill in cash but had plenty of wood to
spare. Cement and other construction materials acquired
through such creative barter transactions also were used.

Although the building continues to raise eyebrows
among locals, it stands as a symbol of Russia's cashless
economy, which has given rise to inefficiencies and
financial abuses. It is also a symptom of the company's
messy financial state, where barter reigns supreme and
debts pile up. Komienergo's accounts receivable as of 1
June 1 stood at a staggering $1.7 billion rubles ($280
million) or about half of total sales, with federal and local
budgets the biggest debtors by far. But the company owes
almost as much to its suppliers and to the government in
taxes.

Like many in Russia, managers at Komienergo are
counting on the country's best-known reformer, Anatolii
Chubais, to pull out his financial wand.

After being fired as first deputy prime minister in
March, Chubais was appointed in late April to take over as
chief executive of Russia's giant electricity company
Unified Energy Systems (EES), which owns a controlling
stake in Komienergo and almost all of the country's
regional utilities. The appointment came after months of
behind-the-scenes wrangling and intense opposition from
the State Duma, which balked at Chubais's running a
company that allows him to wield political influence over
the regions in the run-up to parliamentary elections.

At the helm of Russia's largest company by sales and
its most traded stock, Chubais would seem to have his
hands full. But Russia's financial crisis has pulled him back
into the government yet again to negotiate an emergency
stabilization loan from the IMF.

The job of running state-controlled EES puts Chubais
at the center of the biggest structural problem facing the
Russia: non-payments. EES is at the hub of a vicious circle
of unpaid bills totaling some $96 billion, which is choking
the economy and putting a break on investments. EES and
its subsidiaries are owed roughly $21 billion, including
massive unpaid bills by government-funded organizations.
It, in turn, has built up unwieldy debts to state budgets and
suppliers, such as gas monopoly Gazprom.

EES currently owns the national electricity grid,
operates 34 power plants, and holds controlling stakes in
70 regional utilities that have a monopoly on local
distribution. Under reforms outlined in a presidential
decree, Russia's power generating facilities will be
separated from transmission, but Chubais has said the
transformation will take two to three years.

At present, competition is being smothered. Instead
of independent power stations competing to supply power
on a national grid, prices are set by local regulators. While
a wholesale market for power exists at the national level,
regional utilities often block industries from tapping other
cheaper sources of electricity by charging high
transmission fees. There is also a web of opaque financial
deals carried out in barter and unregulated promissory
notes.

If Chubais can sort out the company's financial mess
and make EES more transparent, it could help spur
economic growth. In his words: "All transformations in EES
will directly affect the Russian economy as a whole." If he
fails to make headway at EES, economists say, Russia is
more likely to remain stuck in first gear, dragged down by
insolvent companies that cannot pay their bills.

Chubais is relying on devising a new strategy for
implementing a restructuring plan that languished under
his predecessor, Boris Brevnov, who was pushed out by the
company's Soviet-era directors after less than a year on
the job.

Analysts said that unlike Brevnov, Chubais has the
political muscle to push through reforms, such as raising
electricity tariffs for households, breaking up regional
monopolies, and turning off non-paying customers. While
many of the proposals are not new, Chubais has for the first
time outlined a blueprint for restructuring the electricity
sector and distributed it to investors and regional leaders
for comments and suggestions.

His strategy to implement the plan relies heavily on
the political and administrative skills he honed in the
government. Using both a carrot and stick, Chubais has said
he will force the federal government to pay its bills to
local utilities that agree to implement tough reforms.

Given Russia's overall economic difficulties, the task
is huge and time is short. Prime Minister Sergei Kirienko
has given Chubais until the fall to make palpable
improvements at EES. But most analysts say he cannot be
expected to turn around the lumbering electricity giant in
six months.
The author is an RFE/RL Moscow-based correspondent.